4. Caesars Entertainment Inc. (NASDAQ:CZR)
Number of Hedge Fund Holders: 67
One of the Best Leisure Stocks, Caesars Entertainment, Inc. (NASDAQ:CZR) operates about 50 domestic casino properties in Las Vegas (49% of 2023 EBITDAR before corporate expenses) and regional (48%) markets. In 2023, the company generated minimal EBITDA from its digital assets and managed properties. Following Eldorado’s 2020 acquisition of Caesars, the US presence of Caesars nearly doubled. Eldorado opened its first casino in 1973 in Reno, Nevada, and before combining with legacy Caesars, had acquired over 20 facilities. The company owns the brands Flamingo, Harrah’s, Tropicana, Bally’s, Isle, and Caesars. Additionally, the company owns the US division of William Hill, a digital sports betting platform (it sold the international division in 2022).
Caesars Entertainment Inc. (NASDAQ:CZR) has to implement a recapitalization plan that combines possible property sales with refinances to pay down its $11.7 billion in long-term debt. As a pioneer in the industry, CZR’s rewards database, which has 65 million members, offers stability against debt worries.
In Q3 of 2024, Caesars Entertainment Inc. (NASDAQ:CZR) reported strong results in both the digital and non-gaming categories. In particular, Las Vegas generated a record non-gaming revenue of $1 billion, led by high hotel and food and beverage cash revenue and 97.1% occupancy. The Caesars Digital segment established a quarterly adjusted EBITDA record of $52 million, up from $2 million the year before, and achieved a 41% YoY rise in net revenue. Improved hold and a 55% volume rise drove an 83% increase in iGaming revenue. Significant cash proceeds for debt reduction were obtained through the sale of successful assets, such as the LINQ Promenade and the World Series of Poker. The group and convention market in Las Vegas showed significant momentum, with a promising outlook through 2025.
Deutsche Bank maintained its Buy recommendation on Caesars Entertainment Inc. (NASDAQ:CZR) shares and increased the firm’s price objective from $56 to $58. The company revised its price objective and modified its forecasts for gaming firms to reflect the shift from 2025 to 2026 as the foundation year for its assessment.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the company from among the funds in Insider Monkey’s database. It owns 3.43 shares worth $143.15 million as of Q3.
Buckley Capital stated the following regarding Caesars Entertainment, Inc. (NASDAQ:CZR) in its Q3 2024 investor letter:
“We recently added Caesars Entertainment, Inc. (NASDAQ:CZR) to our portfolio at an average price of ~$37 per share. We believe that in owning CZR, we are getting world-class assets in both its owned casino real estate and digital businesses – which will comprise almost 70% of 2025 EBITDA – while paying a rock-bottom price. With three important catalysts about to materialize in the next 12 months – significant deleveraging, the digital business inflecting to substantial profitability, and massive FCF generation – we believe investor enthusiasm will turn more positive and the shares will re-rate higher. Caesars currently has an $8.6 billion market cap. We believe it could trade 50% to 100% higher within the next 12-24 months.
CZR as it exists today was formed in July 2020 by the merger of legacy Caesars Entertainment and Eldorado Resorts. Eldorado’s management, led by CEO Tom Reeg, who has an outstanding track record of increasing shareholder value, took over CZR’s operations. Reeg’s focus on maximizing long-term FCF and deleveraging the business aligns with shareholders’ interests. He holds 700,000 shares when fully vested (worth $25 million)…” (Click here to read the full text)
